STRUCTURE
4. Conclusions and role for future research
if bribery allows firms to efficiently and quickly purchase production permits that allow firms to circumvent environmental regulations protect- ing the public good, private efficiency is enhanced at society’s expense. Our purpose is to contribute to a fuller accounting of the costs and benefits of corruption by illustrating that the efficiency implications of bribery differ across institutional arrangements; we do not mean to imply that corruption is beneficial under particular regime types.
Notes
* We thank Phil Keefer, participants to the annual conference of the Italian Society of Public Economics and, especially, Susan Rose-Ackerman for useful comments. The views expressed here are those of the authors and do not necessarily reflect those of the World Bank and its member countries. We thank the World Bank Research Committee for financial support.
1. See, for example, Acemoglu et al. (2002) for a recent take on the institutionalist perspective.
2. In order to illustrate our basic intuition more clearly, we do not consider regulations that directly involve time costs (as distinct from money). The model is easily extended to allow for them.
3. Note that since no comparable question about bribery was asked of firms in Africa, African countries could not be included in our sample.
4. Corresponding to the following categories: 0, up to 5 percent, between 6 and 10 percent, between 11 and 15 percent, between 16 and 20 percent, above 20 percent.
5. La Porta et al. (1998) have five classifications; we omit German and Scandinavian legal origin since we only have a single observation with each of these classifications.
6. Note that APDYis coded 1 (always know the amount to be paid) to 6 (never know), so that higher values of the variable indicate more uncertainty.
7. This interpretation has been criticized for providing an overly simplistic description of the differences between legal regimes.
8. We do not have an altogether satisfying explanation for the positive association between GDP and uncertainty. This correlation might reflect unobserved heterogeneity indicat- ing that in richer countries (where bribing is infrequent) uncertainty on bribes amounts is higher.
9. See, for example, Ali (2000) for the role of public official rotation in Singapore’s anti- corruption effort, and Krushelnycky (2003) for a more recent example from Ukraine.
References
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‘Courts’,Quarterly Journal of Economics,118(2), 453–517.
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incentives and constraints in politics
Jana Kunicová
Democracy is widely believed to have a constraining effect on political cor- ruption. As conventional wisdom has it, elections should give voters the means to do away with their corrupt leaders. However, we do not always observe this outcome. In some democracies voters keep electing and reelect- ing politicians who continue to steal from them. As The Economistwrote,
‘Russian voters, like voters elsewhere, will not put up indefinitely with corrupt leaders who keep them poor. Sadly, they have little experience with anything else.’1 Yet reelecting corrupt incumbents does not seem to be confined to Russia or other new democracies with weak economies. Just before the 2002 presidential election in France, the incumbent president, Jacques Chirac, and his party were embroiled in a web of corruption scan- dals, including inflated housing contracts, fictitious jobs, use of public funds for personal expenses and vote rigging in previous elections.2Despite the abundant evidence, Chirac simply refused to admit the existence of the scandals. Former president of France, Valéry Giscard d’Estaing, observed bitterly:
Chirac can have his mouth full of jam, his lips can be dripping with the stuff, his fingers covered with it, the pot can be standing open in front of him. And when you ask him if he’s a jam eater, he’ll say: ‘Me, eat jam? Never, Monsieur le president!’.3
Denying wrongdoing despite abundant evidence is not uncommon.
However, what was surprising in this case was that the opposition Socialist Party failed to seize upon these issues to build momentum for its own can- didate, Lionel Jospin. None of the eight remaining candidates made much of the incumbent’s corruption either. As a result, corruption did not become a major issue in the campaign, the Socialists did not manage even to get into the runoff, and Jacques Chirac was reelected in 2002.
Perhaps French voters simply did not care about Chirac’s sleazy deal- ings, or maybe they were cynical enough to believe that any elected official would engage in graft to some extent, and therefore had no reason to expect that Chirac’s opponents would behave any better. However, in either case, voters’ beliefs and their ability to vote the corrupt incumbent
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out of office are shaped by the institutions that govern the political process. France is a presidential system where the government’s chief executive is directly elected in a run offsystem.4Voters’ decision making here differs in non-trivial ways from that in parliamentary systems where the chief executive is a prime minister, who is usually a leader of the strongest party.
For example, in Germany in 1999, after a campaign finance scandal broke out around Helmut Kohl, the former chancellor and leader of the Christian-Democratic Union (CDU), his party lost the election. As Angela Merkel, secretary-general of the CDU said in the wake of the scandal, ‘Never again can Kohl lead the CDU as a chancellor candidate in a federal election . . . [Kohl’s confession] is a tragedy for Helmut Kohl, a tragedy for the CDU’.5In contrast to the French case where the oppo- sition was silent about the corruption scandals, the CDU’s main oppo- nent, the Social Democratic Party (SPD), seized the opportunity to criticize the CDU. Just a week after Kohl’s confession, the SPD’s leader and new German chancellor, Gerhard Schroeder, accused the CDU of bringing Germany to the brink of bankruptcy, proclaiming that ‘the only thing they fixed up was their party accounts’.6Voters responded forcefully by strengthening the SPD’s position in both houses of the German parliament.
The purpose of contrasting the French and German cases is to motivate the set of questions that this chapter addresses. Why in some democracies, and not in others, are voters more likely to do away with corrupt politi- cians? Beyond cultural, historical and socioeconomic explanations, is there something in the nature of political institutions – electoral rules, execu- tive–legislative relations, federal or bicameral structure – that constrains politicians’ malfeasance and/or allows the voters to detect and punish it more easily? What do we, as social scientists, know about the effects of democratic institutions on corruption, both theoretically and empirically?
Finally, what are the most interesting questions that remain unanswered by the extant social science research?
As a starting-point of the analysis, it is important to acknowledge that the term ‘corruption’ subsumes many activities – from bribery, kickbacks and the embezzlement of public funds, through special-interest legislation and illegal campaign finance, to vote-buying and electoral fraud. Section 1 discusses some of the most important types of corruption that are likely to be influenced by the design of democratic institutions. Section 2 focuses on the institutions themselves, and Section 3 reviews theoretical work that ana- lyzes the effects of institutions on various types of corruption. Section 4 is devoted to the empirical evidence:first, a discussion of different attempts to measure corruption across countries or over time, followed by a review
of the available large-nresults. Finally, Section 5 summarizes what we have learned so far and outlines the remaining unanswered questions.